MILLERSBURG MILITARY INSTITUTE V. JULIAN PUCKETT, ET AL.
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RENDERED : APRIL 24, 2008
TO BE PUBLISHED
sill'ittrIftur Court Of
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2007-SC-000549-WC
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MILLERSBURG MILITARY INSTITUTE
APPELLANT
ON APPEAL FROM COURT OF APPEALS
2007-CA-000093-WC & 2007-CA-000304-WC
WORKERS' COMPENSATION BOARD NO . 04-73040
V.
JULIAN PUCKETT;
HON . R. SCOTT BORDERS,
ADMINISTRATIVE LAW JUDGE ; AND
WORKERS' COMPENSATION BOARD
APPELLEES
OPINION OF THE COURT
AFFIRMING
An Administrative Law Judge (ALJ) awarded the claimant two years of
permanent total disability benefits under KRS 342 .730(1) and (4) and granted the
employer credit for wages that it paid during the compensable period as well as for
voluntary temporary total disability (TTD) benefits. The Workers' Compensation Board
(Board) affirmed . This appeal is taken from a decision of the Court of Appeals to
reverse on the ground that Chapter 342 does not authorize a credit for bona fide wages
and that there is no suggestion that the wages were anything but bona fide. We affirm .
a
The claimant was born in 1933. The defendant-employer hired him as a full-time
maintenance worker in 1992. He injured his back when he fell from a height of about
12 feet while painting some bleachers on December 1, 2003 . He was over 65 years of
age at the time and received Social Security benefits .
The claimant sought medical treatment but worked without interruption until
February 2004. He received voluntary TTD benefits from February 13, 2004, through
April 10, 2004 ; returned to work ; and received TTD again from December 6, 2004,
through April 25, 2005, due to surgery for a lumbar compression fracture that the
accident caused . He acknowledged that he was unable to perform full-duty work after
the accident and stated that he last worked on November 16, 2005, when the employer
cut his time down to two hours per day and wanted him to pick up heavy bags of trash .
He explained that he could understand why the employer would not want to pay him
"just to be there" because he could no longer climb ladders or paint. He had a lifting
limit of five to ten pounds and "just couldn't do the job ." He filed an application for
benefits on November 23, 2005.
The claimant's orthopedic surgeon assigned a 15% permanent impairment rating
in October 2005, based on an L3 compression fracture and S1 radiculopathy that
resulted from the accident . Treatment notes from March 2006 characterize a
subsequent L2 compression fracture as being a new, non-work related injury. Although
the claimant asserted that the work-related injury was permanently and totally disabling,
the employer argued that it was only partially disabling.
Noting the claimant's age, physical condition, and work history, the AL
determined under Ira A. Watson Department Store v. Hamilton , 34 S .W.3d 48 (Ky.
2000), that he was permanently and totally disabled by the work-related injury and that
he had been so since it occurred . The AL determined that the employer paid TTD
benefits at the rate of $159.41 per week but that the correct total disability rate was
$201 .44 per week . Applying KRS 342.730(4), the AU limited the award to a period of
two years from the date of injury based on the claimant's age and eligibility for normal
old-age Social Security benefits .
The award contained the usual phrase granting the employer credit "for any
benefits previously paid ." A dispute arose over the amount of the credit; thus, the
claimant raised the matter in his petition for reconsideration . The ALJ denied the
petition and granted the employer credit against the award for both the post-injury
wages and TTD payments. Appealing, the claimant argued, among other things, that
the award should not have been offset by his post-injury wages . Although the Board
affirmed, the Court of Appeals determined that Chapter 342 does not authorize a credit
for bona fide wages and reversed .
Workers' compensation is a statutory creation under which workers and
employers agree to forego common law remedies/liability for workplace injuries and to
subject themselves to the provisions of Chapter 342 . At one time Kentucky granted an
employer credit for weeks in which an injured worker continued to work for the same
employer at the same or a greater wage than when injured under what was known as
the "Ditty Rule ." Hawkins Brothers Coal Co. v. Thacker, 468 S.W .2d 256 (Ky. 1971),
points out that the legislature abolished the rule as it affected partial disability cases in
1952 and that E. & L. Transport Co. v. Ham, 341 S .W.2d 240 (Ky. 1960), abolished it
subsequently in total disability cases. Williams v. Eastern Coal Corp. , 952 S.W .2d 696,
701 (Ky. 1997), explains that workers' compensation benefits are awarded by statute;
therefore, they may not be offset by other disability benefits "absent some statutory
authority to do so ."
KRS 342 .730 provides certain offsets against income benefits but does not
include post-injury wages.' KRS 342 .040(1) requires an employer to pay income
benefits when a worker misses more than seven days of work due to a work-related
injury and imposes interest on past-due benefits . Thus, Triangle Insulation and Sheet
Metal Co. v. Stratemeyer, 782 S .W.2d 628 (Ky. 1990), determined that employers are
entitled to credit voluntary benefits against past-due income benefits on a dollar-fordollar basis but that future income benefits must not be affected . The court reasoned
that such a policy encourages employers to pay benefits voluntarily and ultimately
benefits injured workers . Larson, Larson's Workers' Compensation Law, Chapter 82
(2006), notes that an employer may be permitted to receive credit for post-injury wages
if the facts indicate that it intended to pay them in lieu of compensation .
The employer argues that the Court of Appeals erred by determining that the
claimant received bona fide wages where even he acknowledged that he was unable to
return to full duty after the injury . It also argues that the decision permits the claimant to
receive more benefits for the two-year period after the injury than if he had not been
injured because he will receive both his wages and income benefits. We disagree .
An employer seeking credit against its workers' compensation liability has the
burden to show a proper legal basis for the request . The AL failed to state a reason
for granting the credit, and the employer has failed to show a proper legal basis. The
evidence indicates that the employer paid the claimant to perform light-duty work after
his injury and surgery but eventually reduced his hours to the point that he quit. The
1 KRS 342 .730(5) requires income benefits to be offset by unemployment insurance
benefits paid during any period of temporary or permanent total disability. Likewise,
KRS 342 .730(6) requires an offset for payments made under an employer-funded
disability or sickness and accident plan that provides income benefits for the same
4
employer's position before the AU was that the injury was only partially disabling . We
note that had the AU agreed, KRS 342.730(1) would have entitled the claimant to
receive partial disability benefits in addition to his wage . Having failed to convince the
AU that the claimant was only partially disabled or to appeal the finding of permanent
total disability, the employer now relies on KRS 342 .0011(11)(c) and Gunderson v. City
of Ashland , 701 S .W .2d 135 (Ky. 1985), to argue that it actually considered the
claimant to be totally disabled from the outset and intended to pay the post-injury
wages in lieu of compensation.
Special Fund v. Francis, Ky., 708 S .W .2d 641, 643 (1986), explains that a finding
of fact that favors the party with the burden of proof must be reasonable under the
evidence . Nothing in the record supports the employer's argument . Thus, the AU
erred by granting a credit.
The employer's argument that the claimant would receive more "benefits" for the
two-year period after the injury confuses wages and benefits . Wages are paid for
performing labor; income benefits are paid for work-related disability. The claimant's
wages were "bona fide" because they were paid ostensibly for labor and because the
evidence did not permit a reasonable finding that the employer intended to pay them in
lieu of workers' compensation benefits .
The decision of the Court of Appeals is affirmed .
Lambert, C.J ., and Cunningham, Minton, Noble, Schroder and Scott, JJ., concur.
Abramson, J ., not sitting .
disability and contains no internal offset for workers' compensation benefits .
5
COUNSEL FOR THE APPELLANT,
MILLERSBURG MILITARY INSTITUTE :
JOHN STEVEN HARRISON
L. FORGY & ASSOCIATES, PLLC
83 C . MICHAEL DAVENPORT BLVD.
SUITE 3
FRANKFORT, KY 40601
COUNSEL FOR APPELLEE,
JULIAN PUCKETT:
HARRY E . BUDDEN, JR.
912 PLEASANT STREET
P .O. BOX 410
PARIS, KY 40362-0410
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